Correlation Between Allergan Plc and Merck
Can any of the company-specific risk be diversified away by investing in both Allergan Plc and Merck at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Allergan Plc and Merck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allergan Plc and Merck Company, you can compare the effects of market volatilities on Allergan Plc and Merck and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Allergan Plc with a short position of Merck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allergan Plc and Merck.
Diversification Opportunities for Allergan Plc and Merck
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Allergan and Merck is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Allergan Plc and Merck Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merck Company and Allergan Plc is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Allergan Plc are associated (or correlated) with Merck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merck Company has no effect on the direction of Allergan Plc i.e., Allergan Plc and Merck go up and down completely randomly.
Pair Corralation between Allergan Plc and Merck
If you would invest 12,531 in Merck Company on January 23, 2024 and sell it today you would earn a total of 163.00 from holding Merck Company or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Allergan Plc vs. Merck Company
Performance |
| Timeline |
| Allergan Plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Merck Company |
Allergan Plc and Merck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allergan Plc and Merck
The main advantage of trading using opposite Allergan Plc and Merck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allergan Plc position performs unexpectedly, Merck can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Merck will offset losses from the drop in Merck's long position.| Allergan Plc vs. HNI Corp | Allergan Plc vs. Weyco Group | Allergan Plc vs. JBG SMITH Properties | Allergan Plc vs. Mondee Holdings |
| Merck vs. Silver Spike Investment | Merck vs. Alkermes Plc | Merck vs. Eagle Pharmaceuticals | Merck vs. Evotec SE ADR |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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